SOX Compliance With Artificial Intelligence
Companies today are embracing technology to save costs, increase security, streamline operations, and meet compliance standards. Although some operations have remained largely unchanged by the various innovations being witnessed in the digital world, others are experiencing game-changing developments.
One area that is witnessing positive change is regulatory compliance management. Organizations are now able to utilize technology to eliminate or circumvent the challenges that are encountered when trying to meet compliance standards. Here’s how artificial intelligence is changing SOX compliance.
What Is SOX compliance?
In 2002, the US Congress passed the Sarbanes-Oxley Act. This bill was created after a string of major corporate and accounting scandals. The fraudulent practices of organizations made investors suffer devastating losses, caused shares to dip, and led the public to lack trust in the US securities markets.
The SOX was established to increase accuracy, reliability, and transparency in any corporate financial reporting. It aimed to protect the public from corrupt and dishonest corporates and business entities.
Any company that is publicly traded in the US must comply with SOX requirements. For an entity to achieve SOX compliance, it needs to implement the guidelines stipulated in the bill. The requirements are broad, ranging from financial accountability to information security.
The most critical elements are located in sections 302 and 404 of the SOX. They include creating and maintaining internal controls for financial reporting, submitting financial documentation, and ensuring that it is accurate and reliable, establishing and enforcing a data security policy, and providing updated documentation to prove compliance.
Shortcomings of all types should also be reported. Failure to comply risks monetary fines, jail time, removal from listings on public stock exchanges, and reputational damage
How Artificial Intelligence Is Helping In SOX Compliance
Companies are now deploying artificial intelligence (AI) to ease the regulatory compliance burden. AI is being combined with other technologies to try and automate as many compliance processes as possible. Here’s how AI is helping in SOX compliance.
Simplification Of The Compliance Process
A significant number of SOX compliance requirements require you to conduct repetitive manual tasks. These activities include gathering data from different sources, validating the data, and submitting it to the necessary authorities.
These tasks are not only tedious, but they are also time-consuming. AI and big data technology are helping companies to automate these labor-intensive processes without the risk of making errors. This reduces the resources that are diverted to achieve compliance.
The guides that are issued out by regulatory bodies come in huge documents. To break down this information, the material needs to be thoroughly studied.
Going through the entire document can take massive amounts of time, and there is a risk of misinterpreting the contents.
Now, AI is being used to scrutinize complex regulatory documents, give essential highlights, and translate the content into understandable and actionable information. This solution is actively being applied in SOX compliance.
Smart Decision Making
CEOs and CFOs carry a lot of responsibilities when it comes to SOX compliance. A wrong compliance decision will not only cost your company, but it can also affect you as an individual. Luckily, AI can help you make better decisions when it comes to abiding by compliance standards.
AI combined with big data, can decipher complex information and help you discover pitfalls in your compliance program. AI can also be used to give meaningful insights that can help you improve your processes. Internal auditing teams can also use artificial intelligence to improve the controls across the company.
Efficient Regulatory Compliance
Most tasks that are conducted to achieve SOX compliance require human intervention. When employees are diverted to handle compliance duties, the company’s production and staff morale may be affected.
However, AI, big data, and other technologies can automate the compliance process and eliminate or minimize the need for human intervention. Smart machines can now handle administrative and manual duties.
This way, abiding by regulatory requirements will be cheaper, and it will help the entity to focus its resources on attaining its objectives.
Tracking Regulatory Changes
Regulatory standards are not static. AI applications can be used to help your entity to keep up with the latest changes. They can provide timely notifications whenever regulatory revisions are made, allowing you to update your framework quickly. This way, you will avoid any compliance risks.
SOX compliance doesn’t have to look like an unattainable goal. By utilizing the latest SOX technology, you can remove any obstacles that lie along the way to full compliance.
Artificial intelligence is one critical technology that is helping entities to have less complex compliance processes. With it, you will spend less money, time, and manpower trying to improve your controls. For your company to remain competitive while keeping up with the latest compliance requirements, you need to adopt the latest SOX technology.